_South Korea Capital Market Update 2017

Investors are entering South Korea’s property market at an unprecedented pace, as the nation presents investment properties with some of the highest yields in any mature economy.

March 16, 2017

The South Korean real estate market has become extremely attractive to many savvy global investors. Year-on-year, in the nation’s capital – Seoul, we have witnessed a whopping 142% total investment sales volume increase in 2016. While economic uncertainties are unfolding elsewhere in the world, the Korean property investment market has been buoyant in two ways: capital inflow rose by 15% from 2015 to 2016 while capital outflow from Korea almost doubled from 2014 to 2016.

Compared to other stable markets in the region, South Korea offers appealing yields. In Q4 2016, yields for prime office buildings were about 4.4%, significantly higher than Tokyo’s and Singapore’s 3.3%. At the same time, the risks are considerably lower than other emerging markets. As a result, the percentage of foreign investors in Korea is now more than 30% while it was about 15% in 2013.

Looking ahead, amidst potential volatilities in other continents, South Korea as a strategic location in Asia-Pacific may be viewed as the latest investment safe haven.

Written by Pow Ying Khuan, APAC Research Analyst